The vast majority of solar companies are honest, hardworking businesses dedicated to helping homeowners save money and embrace clean energy. However, like any booming industry, the rapid growth of solar has attracted its share of dishonest operators and outright scammers. These bad actors use high-pressure tactics and deceptive promises to lock homeowners into terrible deals, leaving a trail of financial hardship and broken trust.
Knowing how to spot the red flags is the single most important skill you can have when shopping for a solar system. Being an educated consumer is your best defense against the most common solar scams. This guide will break down the five most prevalent schemes we see every day and give you the knowledge you need to protect yourself.
Scam #1: The “Free Solar Panels” or “Government Program” Lie
This is the most widespread and alluring of all solar scams. A salesperson will knock on your door or call you with an exciting claim: “You’ve been selected for a special state or federal program that will give you solar panels for free! You just have to sign up today.”
The Reality: There is no such thing as a “free solar panel” program for the average homeowner. This is a deceptive sales pitch designed to get you to sign a long-term solar lease or Power Purchase Agreement (PPA). While you may not have an upfront cost, you are committing to a 20-25 year contract where you pay a monthly fee to the solar company for the power the system produces. It is not free; it is a long-term financial obligation.
Scam #2: The Guaranteed Tax Credit Deception
The 30% federal solar tax credit (ITC) is a legitimate and valuable incentive. However, scammers will misrepresent how it works. They will present it as a guaranteed cash rebate or a direct discount off the price of your system.
The Reality: The ITC is a non-refundable tax credit. This means it can only reduce the amount of federal income tax you owe. If you are retired, on a fixed income, or have a low tax bill, you may not have enough tax liability to claim the full 30% credit. A salesperson who guarantees you will get a specific dollar amount back from the government, without knowing your personal tax situation, is being dishonest.
Scam #3: The Inflated “Dealer Fee” Model
This is one of the most financially damaging and common solar scams. The salesperson quotes you a very low interest rate on a solar loan, which seems like a great deal. What they don’t tell you is how they got that rate.
The Reality: To offer that low rate, the finance company charges the installer a large “dealer fee,” often 20-30% of the system’s cost. The installer then bakes this fee directly into the total price of your system, massively inflating the amount you finance. You end up with a loan for $40,000 for a system that only had a true cash price of $30,000. While dealer fees are legal, failing to transparently disclose how they affect your total cost is a highly deceptive practice.
Scam #4: The “Your Utility Company is Raising Rates by 30%!” Scare Tactic
High-pressure sales tactics often rely on creating a sense of fear and urgency. A common method is to show you a fabricated “notice” or chart claiming that your local utility company has been approved for a massive, imminent rate hike, and that signing up for solar today is the only way to protect yourself.
The Reality: While utility rates do tend to rise over time, legitimate rate increases are well-publicized and approved through a formal regulatory process. Salespeople who use fake documents or exaggerated claims of massive, immediate rate hikes are manufacturing a crisis to pressure you into a quick decision without doing your own research.
Scam #5: The Disappearing Installer
This scam involves a company that offers a rock-bottom price, demands a large cash deposit or the full payment upfront, and then either does a shoddy, incomplete installation or disappears completely without ever starting the work, leaving you with a massive financial loss and no solar panels.
The Reality: A reputable contractor will have a payment schedule that is tied to project milestones. A demand for a huge upfront cash payment before any significant work has been done is the biggest red flag of all.
How to Protect Yourself
If you are currently dealing with the fallout from one of these common solar scams, it is not too late. Our expert team specializes in analyzing contracts and sales documents to identify these exact types of deceptive practices. We build the evidence file you need to understand your rights and take effective action.